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ACPR Unveils Findings on Regulation of Decentralized Finance in France

The ACPR Reveals Results of Consultation on Decentralized Finance Regulations in France

The Autorité de Contrôle Prudentiel et de Résolution (ACPR), an essential component of the French Central Bank, has recently unveiled the results of its public consultation targeting the regulation of decentralized finance (DeFi). This two-month consultation, running from April to May 2023, was launched through an inaugural document deliberating potential DeFi regulations in France.

Interestingly, based on comprehensive feedback, the ACPR has asserted that the term “decentralized finance” appropriately represents the current state of DeFi rather than “deintermediated finance”. This assertion is based on its observation of paradoxical concentration within DeFi, particularly with regards to the physical frameworks supporting blockchain nodes. In this context, the central role of cloud service providers is undeniable according to the regulatory body.


Paths of Regulation and Broader Crypto Consensus

In line with public perspective, the ACPR has determined that DeFi should primarily operate on public blockchains, dismissing the appeal of private or permissioned variants. However, consensus entails that these public blockchains undergo regular audits. Suggestions for strict regulation of intermediaries and certification of smart contracts have also garnered substantial agreement.

To strengthen the rapidly expanding DeFi ecosystem, the ACPR advocates for the establishment of certification standards for smart contracts, the formulation of governance structures that protect DeFi consumers, and the introduction of supportive measures for the blockchain foundations of DeFi.

In a related context, the European Securities and Markets Authority (ESMA) released their perspectives on DeFi on October 11th. Their detailed report highlighted the numerous benefits that DeFi offers, such as increased financial inclusion, innovative financial products, and enhanced transaction speed, security, and affordability. However, they did not shy away from emphasizing the pronounced risks accompanying these breakthroughs.

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